People will always need insurance, so if you’re looking for a new career this can be a great industry to get into.
Not only is it a booming business that is needed by everyone, but it’s an industry that can be very fulfilling. You’ll be helping people protect what matters most to them no matter what niche you decide to go into, and regardless of whether you’re going to sell personal lines, commercial lines, or even benefits. There are some important steps you have to make before you can become a certified insurance agent, and the two most basic ones are obtaining the right insurance yourself and getting the proper licenses.
Once you have your business plan ready to go and you have passed whatever insurance tests are applicable to the types of insurance policies you plan to sell, you need to get the right insurance in place. After all, what kind of insurance agent would you be if you didn’t have the proper protection yourself? Being able to show potential clients that you are a responsible business owner and that you truly believe in the products you sell by purchasing them yourself, is a great way to earn their business. To get started, here is what insurance you need before you can begin.
BOP or General Liability – First and foremost you have to have General Liability insurance. This is usually the first policy that any business purchases because it covers those common third-party bodily injury and property damage claims. As you know, if a client comes into your office and trips and breaks their wrist, your business will be liable since it was on your premises. However because of the extra bells and whistles, it has to offer, a BOP may be the best option as an insurance agent. A BOP, or business owner’s policy, encompasses both General Liability and Property coverage. You will most likely have an office to greet clients. Regardless of whether you own or rent you will need Property coverage. If you own the office you will want to cover physical damage to the building, and then you will also want to have protection for the stuff inside or your business personal property. You will be covered for things like fire, wind, lightning, theft, and water backup of sewers and drains. A BOP is great because it will also have Business Interruption coverage so if any of these covered perils do occur and you are unable to keep the business open for a period of time, which causes you to suffer a loss of potential income, you can find this coverage here. This is an essential coverage so that you can continue to pay those normal operating expenses like a mortgage, rent, and utilities and maybe even some key employees if you have any. A business owners policy also contains a lot of other endorsements that provide coverages you may not ever think you may need, but end up coming in handy when it turns out you do.
Professional Liability – Certainly, since you are providing a professional service, Professional Liability insurance is a critical piece of being able to operate as a certified insurance agent. Also known as Errors & Omissions insurance, Professional Liability provides coverage for your errors or omissions that end up causing financial harm to a client. In the insurance industry, the risk for an E&O claim is so prevalent that it can be scary. That is why it is important that you maintain your licenses and are always educating yourself on best practices. Some areas where there can be errors or omissions made that can come back to haunt an insurance agent include certificates of insurance, coverage limits, forgetting to bind a policy, not making a proper change, or not even having the right thing insured. There is really an unlimited amount of circumstances where a client could sue an insurance agent claiming there was an error or omission and you will not really know if it was your fault until it is investigated. The best part about Professional Liability insurance is that it also covers your defense costs. Between attorney’s fees and court costs, the amount of money it can take to actually defend yourself can be devastating.
If you plan on doing business in multiple states, you will need to ensure that you are following each state’s rules and regulations. Every state is going to require that you have a license in their state. You will need to apply to even get approved to do business in that state, and some may require that you take a test. Most states will accept your initial passing in your home state and simply require an application and fee of course, in order to obtain that state license.
You may be wondering do insurance licenses transfer from state to state? The answer to that is they do not. Each state is going to require that you hold a license for that specific state before you can begin to sell insurance there. So, if you are working on a prospect and it turns out they are in a different state than you are licensed in, you will have to apply to be licensed in that state. Sometimes the process can be quick, while other times it can take several weeks. It is a good idea to apply for a new state license the minute you know you might need it.
Licensing requirements may vary from state to state. All of the information for each state can be found online so be sure to do your research before starting the process in a particular state. However, there are some pretty common requirements when it comes to every insurance license. First, you must pass the initial test based on the lines you want to sell, like property and casualty versus life and health versus financial products.
Next, you will be required to apply and pay the fee initially, and then at each renewal which is often every 2 years, you will have to apply for renewal and pay the application fee again. Also, most states require that you complete insurance training with a certain number of continuing education hours in order to have your license. If you hold licenses in different states, it might be a good idea to keep track of the different states continuing education requirements so that the license does not lapse and you end up having to start the application process all over again.
When it comes time to decide what types of insurance policies you are going to sell, it is always a safe bet to start with Personal lines. Personal lines encompass your home, auto, umbrella, motorcycle, RV, and even life insurance if you have the applicable license to sell it. Personal lines insurance is an easy way to get started in insurance because auto is a required insurance policy, as well as homeowners if there is a mortgage. Auto and home insurance policies are the easiest to sell since they are often required. You can grow your book of business and income by trying to upsell Umbrella insurance of course, but it is harder to get them to see the need.
Business insurance is a great sector to get into for many reasons. First, the commission percentages that the insurance companies offer on Commercial lines of business is often more than Personal so it is a great way to boost your income. Another reason to get into selling Business insurance is that the retention rate is higher since this type of insurance is a bit more complicated and time-consuming to get quotes for and purchase. Clients appreciate the work you do, especially if you are able to save them some money. The abundance of types of insurance policies on the business side of things is also a great benefit because it gives you more opportunity to round an account which therefore increases the chance that they will stay with your agency. A business that has General Liability, Commercial Auto, Workers Compensation, and an Umbrella is less likely to move than one person who has a Personal Auto policy.
Business owners are often looking for advice in any place they can get it. They want a trusted advisor to tell them what insurance they need based on their unique situation. By selling Business insurance, you can be the guru that they come to in order to protect their business. So, not only will you increase your retention because they appreciate the guidance and expertise, but you can easily increase your revenues due to the commission bump and the number of policies you can sell to one account. If you are really looking to grow your agency, then you can also consider selling both Personal and Commercial lines of coverage.
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